Sun Yuchen revealed FDT and other incidents of stealing nearly 500 million US dollars of custodian assets and called for strengthened supervision to protect public rights and interests
April 3, Wave FieldTRONoriginatorsSun YuchenA case involving the misappropriation of TUSD was revealed at the press conference (TrueUSD) Major financial fraud cases involving fiat reserves. In this case, financial institutions including Hong Kong licensed trust company First Digital Trust Limited (FDT), Legacy Trust Company Limited (Legacy Trust), and a private company in Dubai misappropriated US$456 million of customer funds through joint fraud. Sun Yuchen said that while providing financial support to TUSD owner Techteryx, he was concerned that the case not only threatened the public interest, but also revealed the existence of the trust industry Serious loopholes and jeopardized Hong Kong's reputation as a global financial center.
According to information disclosed at the press conference, after TechTeryx acquired TUSD from TrueCoin LLC (TrueCoin) in December 2020, TrueCoin was retained and entrusted with the responsibility of selecting financial service providers and coordinating international operations. The relevant arrangements ended in July 2023. During this period, TrueCoin used its fiduciary role to select FDT as the custodian of TUSD's statutory reserve assets to manage over $500 million in reserves. At the same time, TrueCoin also recommended the Aria Commodity Finance Fund (“Cayman Fund”) to Techteryx as the main investment.
In a subsequent deal, Truecoin allegedly conspired with agencies such as FDT to transfer US$456 million of TUSD statutory reserves to a private company in Dubai wholly owned by the wife of the aforementioned Cayman Fund investment manager through false documents and unauthorized transfers. FDT and Legacy Trust CEO and Director Vincent Chok Zhuo Junqiang directly approved these illegal transactions, which seriously violated trust obligations.
In 2023, due to FDT's failure to pay interest on certain investments made by its generation Techteryx, Techteryx commissioned an independent professional team to begin a full investigation into FDT and discovered that a large amount of escrow customer funds had been misappropriated while seeking support from Sun Yuchen. Sun Yuchen provided assistance to Techteryx with her personal funds, ensuring that TUSD has sufficient working capital to protect the interests of all TUSD holders.
According to reports, as early as September 2024, the US Securities and Exchange Commission (SEC) issued a public statement accusing Truecoin of participating in fraudulent activity involving TUSD. These fraudulent activities occurred after the Techteryx acquisition and while TrueCoin was still the operator of TUSD. According to the SEC, “TrueCoin benefits itself by misrepresenting the safety of investments while exposing investors to huge, undisclosed risks.”
Sun Yuchen said, “These assets are public funds. To protect the public interest and maintain Hong Kong's reputation as an international financial center, I have decided to provide liquidity support. In addition to being shocked at the scale of this fraud, I feel a great deal of responsibility”.
Sun Yuchen urged Hong Kong regulators to take decisive measures to close loopholes and prevent further loss of public funds. The reason he chose to open up the issue and uncover the fraud was to see all fraudsters held to account under the full sanctions of the law. “They should never have another chance to defraud the public in the name of a licensed institution in Hong Kong or elsewhere.”
In this case, the ability of licensed institutions such as FDT to misappropriate public funds shows that regulation is still flawed, and complex criminal networks across jurisdictions highlight the need for global collaboration to combat financial fraud. Sun Yuchen said, “As a member of the industry, I chose to uncover the truth and aid TUSD in order to protect the public and promote the healthy development of the industry. Fraudsters must be severely punished by law”.
